Coverage Gap

• Reduction in Coverage Gap. New provision provides a $250 government-issued rebate to all beneficiaries that reach the coverage gap in 2010.
  • Implements a 93% coinsurance rate for generics in 2011 in the coverage gap (down from 100% today) and phases it down to 25% in 2020.
  • Similarly phases-down the coinsurance for brand name drugs to 25%.
  • Reduces growth rate of the amount of expenditures it takes for beneficiaries to reach the catastrophic out-of-pocket cap, above which the government pays 95% of drug costs.
    • In 2014 and 2015, reduces the growth rate of the catastrophic limit by 0.25%.
    • In 2016-2019, the rate of growth is the lesser of the urban CPI+2% or the average increase in drug costs. (HCERA § 1101(b), (c))
• Brand Drug Discounts in Coverage Gap. Beginning with drugs dispensed after 1/1/11, incorporates voluntary PhRMA agreement to provide discounts of 50% for brand-name drugs used by Part D enrollees in the Part D donut hole. Discounts paid by the manufacturer are counted as incurred drug expenses toward the catastrophic limit, beyond which Medicare pays 95% of drug costs. (PPACA § 3301)

Taxes

Low-Income Provisions

• Determination of Low-Income Benchmark Premium. Beginning in 2011, the Part D low income premium subsidy benchmarks are calculated to exclude any beneficiary rebate in MA-PDs that bid below the benchmark or MA performance quality bonus payments. (PPACA § 3302)
• De Minimis Policy for Subsidy-Eligible Individuals. Directs HHS to develop a de minimis policy to permit a Part D plan to waive the monthly premium for a LIS eligible individual. Beginning in 2011, the policy of auto enrolling LIS eligible beneficiaries shall include MA-PD and PDPs that have waived the monthly premium for LIS individuals. (PPACA § 3303)
• Special Rule for Widow(er)s. Beginning in 2011, extends for one year the LIS determination period for individuals whose spouse dies. (PPACA § 3304)
• Improved Information for Certain Subsidy-Eligible Individuals. Beginning 2011, for LIS eligible individuals that are reassigned to another plan (because their previous plan no longer qualifies for LIS enrollments), within 30 days HHS is required to provide the beneficiary with information on formulary differences between plans and a description of the individual’s right to request a coverage determination, exception or reconsideration. (PPACA § 3305)
• Outreach and Assistance Funding. Provides $7.5 million for FY 2009 and $15 million for FY 2010 through 2012 for state health insurance programs; the same amounts and periods for Area Agencies on Aging; $5 million in FY 2009 and $10 million for FY 2010 through 2012 for Aging and Disability resource centers; and $5 million in FY 2009 and $5 million for 2010 through 2012 for contract with the National Center for Benefits and Outreach and Enrollment. (PPACA § 3306)
• Cost-Sharing Elimination for Certain Individuals. Eliminates cost-sharing for an individual receiving services through a home and community based waiver who would otherwise be institutionalized, not earlier than 2012. (PPACA § 3309)

Other Part D Provisions

• Protected Classes. CMS shall designate the classes of medications that should be included in the “protected” classes in Part D, and in the interim, prior to a rule regarding these classes, the current 6 classes will be codified. Beginning 2011, requires all Part D sponsors to cover all drugs in the 6 protected classes (currently they have to cover “all or substantially all”). (PPACA § 3307)
• Means-Test Part D. Medicare Part D subsidies would be reduced for higher-income beneficiaries in a similar manner as Medicare Part B premium subsidies through Social Security withholding. (PPACA § 3308)
• Free Generic Fill. Not earlier than 1/1/11, provides for MA-PD and PDP sponsors to waive cost-sharing for the first fill of a generic medication in order to promote greater use of generic substitution. (PPACA § 6402(d)(2)(B))
• Reducing Waste in Long-Term Care Pharmacies. Beginning 2012, requires MA-PD plans and PDPs to utilize specific, uniform dispensing techniques developed by HHS (such as daily, weekly or automated dose) when dispensing covered Part D drugs to institutionalized enrollees to reduce the waste associated with 30-day fills. (PPACA § 3310)
• Improved Complaint System. Requires HHS to develop a complaint system to collect complaints against MA-PD plans and PDPs and to annually report to Congress on the number and types of complaints. Directs HHS to develop a model electronic complaint form and “prominently” display on the front page of Medicare.gov. (PPACA § 3311)
• Uniform Exceptions and Appeals Process. Requires all Part D sponsors to use a single, uniform exceptions process for the determination of drug coverage and provide instant access by means of a toll-free phone number and the Internet by 2012. (PPACA § 3312)
• OIG Studies and Reports. Requires HHS IG to study and report by 7/1/11 (and annually thereafter) on the extent that formularies include drugs commonly used by full-benefit dual eligible individuals. Additionally requires, by 10/1/11, a report on the prices for covered Part D drugs and covered outpatient drugs including the 200 most frequently dispensed drugs and an assessment of the financial impact of any discrepancies in prices on the federal government and state governments under Medicaid. (PPACA § 3313)
• Costs Counted toward OOP Threshold. Includes drug costs incurred by AIDS drug assistance programs and Indian Health Service, an Indian tribe or organization on behalf of Part D enrollees toward the annual out-of-pocket cap. (PPACA § 3314)
• Improvement in MTM Systems. For plan years beginning at least 2 years from enactment, requires Part D sponsors to include medication therapy management (MTM) services to targeted beneficiaries that include an annual, comprehensive, person-to-person medication review and a process for autoenrollment with the ability to opt-out. Sponsors must also have in place a process to quarterly assess the medication use of individuals who are at risk but not enrolled in a MTM program. (PPACA § 10328)
• MTM Grants. Requires HHS to award grants to implement medication therapy management (MTM) services for specified individuals (e.g., those who take 4 or more medications, high-risk medications or have 2 or more chronic diseases). Specifies requirements for grant entities. Requires MTM services to include a list of specified services (e.g., assessments of health and functional status, medication treatment plans and medication therapy, etc.). Permits HHS to award grants for the development of performance measures that assess the use and effectiveness of medication therapy management services. (PPACA § 3503)
• Marketing Prohibitions. Adds new types of marketing violations for which sanctions and penalties can be applied, including enrolling or transferring an individual between plans without their consent or transferring an individual solely for the purpose of earning a commission. Extends such prohibition to all employees, contractors, providers or suppliers that contract with the PDP or MA-PD plan. Effective retroactively to 1/1/10. (PPACA § 6408(b)(2))
• Expansion of Recovery Audit Contractor Program. Expands federal Recovery Audit Contractor (RAC) program to Medicaid and Medicare Parts C and D. Effective 12/31/10. (PPACA § 6411)